Stock Pick From Tea and Coffee Sector

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.

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TATA GLOBAL BEVERAGES
CMP - Rs 193
BSE CODE 500800 Volume 3155166 Face Value Rs 1

The beverage arm of Tata Sons, Tata Global Beverages is the world’s second largest player in tea segment, where more than 65% of its revenue comes from overseas market. It is looking forward to restructuring plans by selling its stakes in many other Tata Group firms to its parent and also selling other underperforming businesses. It has already reduced its FY17 borrowings by more than 14%. Financially, the company has posted robust profit growth of 177% led by operational efficiency, despite marginal growth of 1.8% in revenue in Q1FY18. The annual net profit growth came in at 22.5% in FY17. Thereby, considering bottomline growth and restructuring plans through stake sale, we recommend a buy in the scrip for a target of Rs
225 and with a stop loss of Rs 176.

BLUE STAR
CMP - Rs 699  
BSE CODE 500067  Volume 3,024 Face Value Rs 2

The consumer electronics company derives 51% of revenue from electro-mechanical projects and packaged air conditioning systems and 45% from unitary products. The company rec ently posted decent revenue growth of 7% in Q1FY18 driven by execution of order book and ahead of GST roll-out. Further, it reported PAT growth of nearly 44%, driven by reduced non-operating expenses. On an annual basis, the topline and bottomline remained subdued, but the company has nearly halved its borrowings in FY17. Going forward, the company management remains bullish in revival of its electro-mechanical business driven by government’s focus towards infrastructure development. It also expects continued growth in unitary segment, driven by demand for room air conditioners. The company is diversifying its product line through addition of newer business segments like water purifiers, air purifiers and air coolers. With this, we recommend a buy in the scrip for a target of Rs 830 and with a stop loss of Rs 640.